High-net-worth individuals typically have diverse financial portfolios. Their holdings may include, for example, cash in banks, money market accounts, publicly-traded stocks, bonds, capital assets, real estate, or equity ownership in public or private businesses. Furthermore, these holdings and interests may be distributed around the world.
It is generally recognized that optimum decision-making relating to the management of such portfolios requires specialized expertise, for example in areas of law, tax, accounting, estate planning, securities brokering, and insurance. Additionally, to be most effective, each decision should be made with a view to the entire portfolio in order to minimize the overall tax liability, for example, or to maintain a minimal degree of total investment risk.
High net worth individuals typically have little time to personally manage their portfolios. Some have significant responsibilities associated with their businesses or professions. Others simply choose to engage in other activities. As a practical matter, any one individual is also very unlikely to possess the total range of specialized expertise to effectively manage a large and complex portfolio without consulting several trusted advisors.
Some financial service entities have developed methods to assist high net worth individuals. Such entities may provide and coordinate advice in the areas of investment selection and management, tax planning, estate planning, or insurance (risk management), for example.
Methods employed by known financial service providers have several drawbacks. First, they fail to comprehend the many needs of the high-net-worth individual, such as specialized legal advice and investment banking services. Even among entities that may claim to provide “full service” support to high net worth individuals, only a limited number of services are actually provided. As a consequence, many services may be performed in a way that is not coordinated with the client's overall portfolio.
Additionally, existing financial services may rely on a single account manager to coordinate the services to a client. An account manager is a limited resource. While this may be acceptable for a client with limited needs, it may be inadequate in the case of a very large and complex portfolio. Another drawback is that it is virtually impossible for a single account manager to have the breadth and depth of experience necessary to effectively balance competing considerations in the management of such portfolios.
These and other drawbacks limit the utility of current methods for providing financial and other services to high net worth individuals.